The amount by which a company's sales can decline before losses are incurred is called the:
A)contribution margin.
B)degree of operating leverage.
C)margin of safety.
D)contribution margin ratio.

Question

Quizplus · Accepted Answer

Margin of safety represents how much sales can decline before a company reaches its breakeven point, where losses start to occur. It is usually expressed as a percentage and is calculated by subtracting the breakeven level of sales from the actual sales level and dividing the result by actual sales.

The Amount by Which a Company's Sales Can Decline Before